The framework attempts to make the coal available in a fair manner to the end-users. The proposed auction methodology leads to the price through a market mechanism; it does not seek to maximize revenueETEnergyWorld | February 03, 2016, 14:34 IST

NEW DELHI: The Cabinet Committee on Economic Affairs on Wednesday approved a plan to that all allocations for coal linkages for the unregulated sector such as cement, steel, sponge iron, aluminium and their captive plants will be done only through auction.

"The framework attempts to make the coal available in a fair manner to the end-users. The proposed auction methodology leads to the price through a market mechanism; it does not seek to maximize revenue," an official release said.

The auction plan, which would be conducted by Coal India and Singareni Collieries, also ensures that all market participants of non-regulated sector have a fair chance to secure coal linkage, irrespective of their size, the release said.

"To start with, in the first tranche, the quantities corresponding to FSAs of non-regulated sector (except CPSEs and Fertilizer) maturing in 2015-16 onwards and 25% of incremental CIL and SCCL production during 2015-16 over 2014-15 will be put up for auction," the release said.

As per the policy, there may not be premature termination of fuel supply agreements (FSAs) of non-regulated sector as of now. It also said there will be no renewal of existing FSAs of non-regulated sectors, which are maturing in 2015-16 onwards, after completion of their current agreement tenure.

It further said the existing FSAs with Central Public Sector Enterprises (CPSEs) may continue to be renewed on expiry; for additional linkages and CPSEs may participate in auction.

For auction of linkages, separate quantities shall be earmarked for sub-sectors of non-regulated sector, the release said.